2.5 Legal Entity
ASC 810-10 — Glossary
Legal Entity
Any legal structure used to conduct activities or to hold assets. Some examples of such structures are
corporations, partnerships, limited liability companies, grantor trusts, and other trusts.
Throughout this Roadmap, we refer to the entity that is analyzed for potential consolidation as the “legal entity.” Both the VIE model and the voting interest entity model require a reporting entity to evaluate its involvement with any legal entity to establish whether consolidation of the legal entity is required. The assessment of whether a structure is a legal entity is a critical first step in the overall consolidation analysis. A common misconception is that a legal entity has to be incorporated or registered with some type of governmental agency or regulatory body. The definition of a legal entity is meant to be extensive and depends on specific facts and circumstances. See Section 3.2 for more details.